Video: Petraeus’ scandal overshadows president’s re-election

MR. DAVID GREGORY: This morning on MEET THE PRESS, an unfolding scandal in Washington and the new battle over the fiscal cliff.

The election celebration is short-lived--a surprise resignation by CIA director David Petraeus comes days before congressional hearings probing the attack on the U.S. consulate in Benghazi. We’ll get reaction this morning from Capitol Hill and the very latest reporting on this developing story from our chief foreign affairs correspondent Andrea Mitchell who broke the story Friday afternoon.

Also, the president and Republicans get set to negotiate new taxes and spending cuts. Is a breakthrough possible?

(Videotape)

PRESIDENT BARACK OBAMA: I’m open to compromise. I’m open to new ideas. It was debated over and over again and on Tuesday night we found out that the majority of Americans agree with my approach.

(End videotape)

(Videotape)

SPEAKER JOHN BOEHNER: Mister President, this is your moment. Now, we’re ready to be led, not as Democrats or Republicans but as Americans. Now, we want you to lead.

(End videotape)

GREGORY: Where does it all go from here? We’ll ask Democratic Senator from New York, Chuck Schumer and Republican Senator from Oklahoma Tom Coburn. Also, we check in with CNBC’s Jim Cramer, to hear about the economic stakes should Washington fail to avert fiscal disaster by the end of the year.

Plus, what’s the future of the GOP after a stinging defeat for Romney and the Republicans? And how will President Obama govern in a second term? We’ll talk to a newly-elected Democratic Congressman Joaquín Castro; plus, Republican strategist Steve Schmidt; presidential historian Doris Kearns Goodwin; NBC’s political director and chief White House correspondent Chuck Todd; and The Washington Post’s Bob Woodward.

ANNOUNCER: From NBC News in Washington, the world’s longest-running television program, this is MEET THE PRESS with David Gregory.

GREGORY: And good Sunday morning. The newly re-elected president’s message on Friday, get back to work, but the focus of that work and on that work is now overshadowed by Friday afternoon’s resignation of CIA Director David Petraeus, which sent as you know shockwaves through Washington. New details emerging now this weekend about the FBI investigation that led to the discovery of what officials believe was an extramarital affair between Petraeus and his biographer, Paula Broadwell. And, of course, so many questions about where this goes from here. Joining me now for the latest on this developing story, The Washington Post’s Bob Woodward and our own chief foreign affairs correspondent Andrea Mitchell who broke the story, as I mentioned, on Friday. So Andrea, here we’re on Sunday morning, new details. We know there was someone close to Petraeus who got threatening e-mails, a whistleblower. She goes to the FBI. And that’s how they get to the affair. Fill us in.

MS. ANDREA MITCHELL (NBC News Chief Foreign Affairs Correspondent): Well, this other woman, and we know that she’s not in the government and that she’s not a family member, complained to the FBI about what she felt were harassing and threatening e-mails. It was that investigation that led to-- they were anonymous e-mails, that led to Broadwell’s e-mail account and by examining Broadwell, Paula Broadwell the biographer’s e-mail account, that’s how they uncovered or stumbled as they put it into this…

GREGORY: They were sexually explicit e-mails between Broadwell and Petraeus. That’s what we're led to believe talking (Unintelligible).

MS. MITCHELL: Or some indication in those e-mails of an ongoing relationship. That’s according to FBI officials and other officials with whom we’ve spoken. So, it was that-- that unwounded and we should stress, there was never an investigation into Petraeus.

GREGORY: Mm-Hm.

MS. MITCHELL: And they have pretty much shut down any idea that there was any kind of security or national security leaks. So, this is not a criminal matter. And it would have rested there had not, and this is what is new in the last twenty-four hours, had not it come to the attention from an FBI whistleblower to a member of Congress, who then reported to Eric Cantor, the Republican leader, who then said to the FBI, you have to take this further. They were not at that stage going to the White House with it. And there have been a lot of questions raised, why did it first come to the attention of the head of national intelligence on Tuesday at five o’clock on Election Day? Why did it not come to the White House’s attention until the next day, Wednesday.

GREGORY: …Paula Broadwell, she writes a book called All In. This is the biography of-- of David Petraeus. And as, you know, part of promoting that book she did some interviews including on The Daily Show that talks a bit about how they struck up this relationship, biographer and subject and her trips to Afghanistan. Let’s watch a portion of that.

MR. JON STEWART: You were a runner, and-- and he-- to-- to-- to get to know him, he wanted to run with you. So you-- you ran together.

MS. PAULA BROADWELL: This is a typical men-- mechanism he uses to get to know young people. He’s done it throughout his life. So it was an opportunity for me to interview him on the run. And I think it was-- I was-- I thought I’d test him, but he was going to test me. And it ended up being kind of a test for both of us since we both ran pretty quickly. But that was the foundation of our…

(Laughter)

MS. BROADWELL: …relationship and we-- and when I was in Kabul we would do a lot of interviews on runs. For him, I think it was a good distraction from the war, you know, and-- and, you know, of course, he’s a bit concerned as someone in his position would be, about legacy, and he also, you know, came at it from a mentoring point of view and wanted to help me with this project.

(End videotape)

GREGORY: Petraeus is sixty. She is forty, a mother of two, married herself. What more stands out to you this morning?

MR. WOODWARD: That-- that, obviously, he was enchanted with her. Interestingly enough, I think the David Petraeus story is not going away. Just this coming week, there are going to be hearings in the House in the intelligence committees on Benghazi episode a month ago where four Americans including the ambassador were killed. It turns out that Petraeus, a week and a half ago went to Tripoli, Libya and conducted his own personal inquiry into Benghazi, interviewed the station chief, actually got the base chief from Benghazi down, interviewed him. Interviewed the head I think twice of the quick reaction force that was involved in this episode. So he knows the full story. I-- he has a lot of credibility with Republicans, who as we know are on fire about Benghazi. And now the acting CIA Director, Mike Morell, is going to have to present that evidence.

GREGORY: And this is new information that you have this morning. What was going to be the takeaway from what Petraeus would have presented had he testified?

MR. WOODWARD: I-- I think it would essentially back up the White House. And there are still unanswered questions and so forth. But one of the things Petraeus always did was dig deep. And so he-- apparently there are videos and there are tapes or-- tapes and pictures and things that can be shown. So it’s-- it-- it is not going away. And the question will be, I suspect, will he be asked to testify as a private citizen either informally, in closed door, and so forth. Probably only Petraeus can-- if-- if he has the data stop this Benghazi frenzy.

MS. MITCHELL: A lot of people say not. That he eventually felt that he had to. We know that the head of intelligence, Clapper, told him he should. The president asked for twenty-four hours to think it over and then suggest--

GREGORY: And all this comes in on election night, to Clapper and to the White House.

MS. MITCHELL: Which is why conspiracy theorists are going, you know, running wild with it. I am persuaded as far as all of my reporting that the White House did not know about this until Wednesday, that Clapper didn’t know about it until Tuesday night. And just a word, it’s Veterans Day. And we should say something about Holly Petraeus. She has been a hero among the military families for her work. When they were stationed in-- in Kentucky, she was not the general’s wife. She was really one of the team, one of the spouses. And her work on consumer protection and-- and financial education should continue and I hope she can find a way to continue her career.

MR. WOODWARD: That there’s-- there’s a political dimension to this for Obama and the White House, they wanted to keep Petraeus. Petraeus is very important, credible; as we know from history CIA directors can cause presidents great grief--the Bay of Pigs…

GREGORY: Sure.

MR. WOODWARD: …WMD not in Iraq and so forth. Also, they can do very important things for presidents like the bin Laden raid…

GREGORY: Sure.

MR. WOODWARD: …which was a covert CIA operation.

GREGORY: And I know-- I know from spending time with him in his current role how much he loved this job, was engaged by this job, and had tremendous bandwidth in terms of his counterterror operations. So there will be a lot of questions about who replaces him, is there continuity?

MS. MITCHELL: And very quickly, he was-- he was transforming the agency. He had a rocky start. But he was seeing a-- a global vision, the economic future, looking at Asia, looking at China. He was going well beyond the counterterror operations.

MR. WOODWARD: And he did the honorable thing. He-- he had to resign given this. I-- I don’t think there was any question.

GREGORY: All right. More on this when we discuss it with our roundtable. Andrea Mitchell, Bob Woodward, thank you both very much. I want to turn now to two key voices in the senate, Democratic senator from New York, Chuck Schumer and Oklahoma Republican senator Tom Coburn. Senators, welcome both of you back to MEET THE PRESS. Senator Schumer, let me start with you…

SEN. TOM COBURN (R-OK): Good morning.

GREGORY: …this morning. Dianne Feinstein, the Senate Intelligence Committee Chairwoman indicated this after the news of Petraeus, "I wish President Obama had not accepted this resignation, but I understand and respect the decision." Do you wish he had not resigned over this?

SEN. CHUCK SCHUMER (D-NY): I think I would leave that decision to General Petraeus. He’s been such a hero in so many ways. I’ve known him. He’s a New Yorker. I’ve spent time in Iraq with him. And, you know, your heart breaks for him and his wife. If he thought it was appropriate to resign, I leave it with him.

GREGORY: Senator Coburn, your thoughts on that.

SEN. COBURN: Well, I think leadership matters and setting an example. And I don’t think he had any choice given the sensitive nature of everything that he does that he could have any questions about his character and his integrity. And so I think he did the honorable thing.

GREGORY: Senator Coburn, let me stay with you, the Benghazi questions that Bob Woodward just mentioned with new information this morning. Petraeus’ own fact finding on this, preparing to testify. Both Republicans and Democrats as well with a lot of questions about the CIA’s role, whether there was enough communication, whether there was enough security on the ground and why not if that was not the case that would endanger our personnel there in our consulate? What do you believe about their remaining questions and what role Petraeus still plays in answering them?

SEN. COBURN: Well, I think he needs to answer them. He was obviously the person in charge of the CIA and he has information that probably other people don’t have. So I think it’s still going to be important that his input comes into the conclusion and what we find about what went wrong and what mistakes were made. We obviously weren’t prepared. I think you have to spend time to find out what happened and how it happened and-- and to get to the bottom of it so we don’t see this kind of mistake again.

SEN. SCHUMER: Yeah, I think first we ought to see what Mr. Morell has to say and is he able to give the committee the information that General Petraeus dug up when he was over there in Iraq and then we should take it from there.

GREGORY: Let’s talk now about the fiscal cliff where the-- the debate turns in Washington after the election. Let’s remind our viewers what we mean when we talk about the fiscal cliff. This is what’s happening at the end of the year. The Bush tax cuts expire, so taxes go up. The emergency unemployment benefits end. The 2011 payroll tax holiday expires. The alternative minimum tax kicks in so taxes automatically go up. Plus, at the same time, you have nearly a trillion dollars in spending cuts that are automatic. That’s what we mean by this sequester half of that in defense, also non-defense cuts are triggered. That’s what has to be averted, Senator Coburn. And here’s my bottom line question, my view is that if there’s a mandate from this election it’s about compromise in Washington. So what pain do Republicans have to accept to get to a deal in your judgment?

SEN. COBURN: Well, I think you heard the Speaker of the House put forward the-- that they’re ready for the president to lead. They’re ready to agree to revenue increases. But I think they’re also interested in making sure that we downsize appropriately the federal government in terms of its waste. There-- there is-- there is no question that we have a government that’s twice the size it was eleven years ago. And we can find the money through sequestration or directly from what the House has passed which is difference in sequestration but the same amount. I’d also remind you that the trillion dollars is over ten years so it’s a hundred billion out of a 3.7 trillion dollar budget which is less then three percent.

GREGORY: But, Senator, let me zero in-- let me zero in on my question. I just think it’s important before we go through the-- the litany on this, is the bottom line that Republicans losing this election means, as the president said, that they have to give in and allow taxes to go up on wealthier Americans?

SEN. COBURN: Well, I think they’d already agreed to that. I think you heard John Boehner say that already. I-- we’ve had votes in the Senate where we’ve actually gotten rid of tax-- tax credits. I think that’s a given and I think the vast majority of Americans agree with that. The question is how do you do that and how do you allow taxes to rise, at the same time you fix the real problem and the real problem is uncontrolled entitlement spending and a government that has grown massively. Not just under this administration, under Republican administration. So--

GREGORY: Well, let me turn to Senator Schumer on this point.

SEN. COBURN: --you have to approach both sides of it.

GREGORY: Let me turn to Senator Schumer. I’m going to ask you the same-- same question. If the mandate is compromised, what do Democrats have to be prepare-- prepared to accept as a painful outcome in order to achieve compromise?

SEN. SCHUMER: Well, I agree with you, the mandate is compromise. That’s why we have a divided House and Senate. And I think if the House stands for anything it’s cut government spending, as Tom Coburn said, and I think we’re going to have to do more of it. We heard the mandate in 2010 where it was a clear mandate, cut spending and we did, we cut nine hundred billion dollars in spending that we didn’t like, painful to us. But there’s also a clear mandate on the other side, David, and that is the president campaigned on letting the Bush tax cuts expire above people for-- of two hundred fifty thousand dollars income. He campaigned on it clearly. He didn’t back off from it. The exit polls showed that sixty percent of the people agreed with it. And I think that’s the other side. And what’s in my judgment, maybe a little different than Tom’s, what-- what’s messed up these agreements is revenues. We never really get real revenues because people believe in some things like dynamic scoring, sort of a counterintuitive view that if you cut taxes you will get deficit reduction and increased government revenues. It doesn’t make sense. I call it Rumpelstiltskin, after the gnome who turned straw into gold. It’s a fairy tale. So we need the Republicans to do in 2012 what we did in 2010. We hear the mandate, continue to cut spending, but they have to hear the mandate, real revenues, not this kind of stuff like dynamic scoring that Speaker Boehner did mention.

GREGORY: All right. Let me follow on that. I have talked to a top Republican in the Senate in recent days and said look, the president has got some leverage on taxes but it was-- it was nice to hear him say, this source said that he talked about more revenue, not necessarily higher rates. You have talked about that this week as well, Senator Schumer. Could you live with not raising tax rates and finding a way to get enough revenue through closing loopholes and by other means to raise revenues?

SEN. SCHUMER: Yeah. Well, it’s not math-- mathematically possible if you stick by the other tenet, which parties agree on, which is not raise taxes from people below two hundred fifty thousand dollars. In other words, if you’re going to get to the Bowles-Simpson number of four trillion dollars of deficit reduction, which we have to do, and you’re not going to increase taxes on the middle class, two hundred fifty thousand or lower, which we shouldn’t. Their incomes are shrinking. The only way to do it-- the only way mathematically I’ve seen to do it is go to that 39.6 percent rate. If someone can show another plan that doesn’t do that, we’ll look at-- we could look at it. But no one’s showing one because I think it’s mathematically impossible.

SEN. COBURN: Well, I-- you know, I put out a year and a half ago the subsidies for the rich and famous who are the well-connected and well-heeled in this country and have benefited themselves through the tax code. And we can get thirty-nine billion dollars a year just through very simple changes in terms of tax credits and limiting total tax deductions. And that’s the other way which Chuck has not recognized, is-- is if you limit total deductions and exemptions for those above two hundred and fifty thousand dollars, what you can essentially do is raise all sorts of money which nobody really wants to increase revenues because it does have a negative, detrimental effect on the economy. But in fact, that’s the part of the bargain that you have to do. And we’re at historic lows on revenues. So I’ve always agreed to it. I voted for the Simpson-Bowles, I’ve been a part of the Gang of Six, the Gang of Eight. I agree that we have to go there but how we go there is very important in terms of the incentives for capital investment in this country. And we have to do it in a way that does not diminish that.

GREGORY: Let me turn quickly to lessons from this election and where things go beyond this negotiation over the fiscal matters. Senator Schumer, immigration?

SEN. SCHUMER: Yes.

GREGORY: Are we going to get comprehensive immigration reform? It sounds like, if you listen to the House speaker, they’ve had a change of heart, they want a comprehensive plan. Is there news to be made on this?

SEN. SCHUMER: Yeah, I think so. Senator Graham and I have talked, and we are resuming the talks that were broken off two years ago. We had put together a comprehensive, detailed blueprint on immigration reform. It had the real potential for bipartisan support based on the theory that most Americans are for legal immigration but very much against illegal immigration. Our plan just to be quick does four things. First of all, close the border, make sure that’s shut. Second, make sure that there is a non-forgeable document so that employers can tell who was legal and who was illegal. And once they hire someone illegally, throw the book at them. Third, on legal immigr-- that will stop illegal immigration in its tracks. Third, on legal immigration, let in the people we need, whether they be engineers from our universities, foreign or people to pick the crops. And fourth, a path to citizenship that’s fair, which says you have to learn English, you have to go to the back of the line, you’ve got to have a job and you can’t commit crimes.

GREGORY: All right.

SEN. SCHUMER: Graham and I are talking to our colleagues about this right now and I think we have a darn good chance using this blueprint to get something done this year. The Republican Party has learned that being anti-illegal imm-- anti-immigrant doesn’t work for them politically and they know it.

GREGORY: Senator Coburn, what is the lesson for your party from this election?

SEN. COBURN: You have to be-- you have to demonstrate what you’re for, not what you’re against. I think that’s the key ingredient. And sell your vision that’s positive for America and not a negative vision about what’s wrong with America. I think you have to have both. But we didn’t sell a positive vision. We didn’t explain to people what we’re for. And I think that’s the one thing that I took away from the election is that-- and that’s what was lacking.

GREGORY: Do you see, Senator Schumer, very quickly, a role for Governor Romney in this process? Would you like to see the president bring him in to, say, the negotiations over the fiscal cliff?

SEN. SCHUMER: Well, I don’t know about that. But I would like to see him speak up. I think he-- you could see him struggling in the general election. The hard right had moved him so far over on issues like immigration. And I didn’t think his heart was in it. So he could help. You know, we need forces to help. When either party moves too far over, they lose. Democrats too far left, Republicans, too far right. You need some mainstream Republican voices. You need the business community to speak up…

GREGORY: Mm-Hm.

SEN. SCHUMER: …on the fiscal cliff and the need for revenues. You need people like Romney and Jeb Bush and others to talk about doing a comprehensive immigration reform so that the Republicans who have the courage to stand up, and Tom Coburn has had that courage…

GREGORY: Yeah.

SEN. SCHUMER: …don’t just hear from the shrill right. And Graham is willing to do it on immigration.

GREGORY: All right.

SEN. SCHUMER: He’s going to say that this morning. We need other people to do the same.

GREGORY: All right. We’re going to leave it there as this debate continues. Senators, thank you both very much.

SEN. SCHUMER: Thank you.

SEN. COBURN: You’re welcome.

GREGORY: And coming up here, you heard where both sides stand. We’re going to have some reaction to these two senators and analysis on where the negotiations go from here.

Also, the economic stakes. If lawmakers can’t get a deal, what does it mean to all of us? We’ll check in with the host of CNBC’s Mad Money, that’s Jim Cramer.

Also, we’ll talk more broadly about the-- the politics post-election and more on this Petraeus scandal that’s unfolding from our roundtable: Joaquín Castro, Congressman from Texas; Steve Schmidt, Republican Strategist; Doris Kearns Goodwin, the historian of course; more from Bob Woodward and our own Chuck Todd, as we continue here on MEET THE PRESS.

(Announcements)

GREGORY: Coming up, the Dow closed Friday down nearly three hundred points for the week, finishing out one of the worst weeks of the year for the stock market, due, in part, for the concerns about the fiscal cliff. We’re going to check in, in addition to our group here, CNBC’s Jim Cramer on the economic stakes of this debate, whether the business community as well might be a natural ally for the White House in these talks. That’s my view as-- of what could happen. We’ll get into it all right after this brief commercial break.

(Announcements)

GREGORY: We’re back now, joined by our political roundtable. Presidential historian Doris Kearns Goodwin whose best-selling book Team of Rivals is now out in paperback ahead of the launch of the movie adaptation Lincoln, starring Daniel Day-Lewis as our sixteenth president. Doris herself will be starring-- no I'm sorry. No I was so excited about Lincoln. Our political director and chief White House correspondent after epic great work on the campaign, Chuck Todd. The Washington Post’s Bob Woodward is still with us, Republican strategist Steve Schmidt and the newly elected Democratic Congressman from Texas, Joaquín Castro-- Castro rather who just happens to have a twin brother…

REP.-ELECT JOAQUÍN CASTRO (D-TX): That’s right.

GREGORY: …who is the mayor of San Antonio, oh my God.

REP. CASTRO: Please don’t call me the mayor today.

GREGORY: We’ll not call you the mayor. Let me just say something. The joke and the whole fun with the split screen that will be done never, that will get old never.

GREGORY: No, it’s just fascinating. It’s great to have you here. Congratulations on your election, a lot to get to. Chuck Todd let’s start with this-- this scandal about General Petraeus. Within the White House this had to be something that really took them by surprise, but then there was a big question about does he need to resign?

MR. CHUCK TODD (Political Director; Chief White House Correspondent; NBC News): It really did. And look, the president did take 24-- they didn’t want to fill this step. You know, it was funny to watch. So many fairly high-level White House staffers on Friday didn’t know why, what was going on.

GREGORY: Right, why he was coming to the White House. Yeah.

MR. TODD: They he didn’t know this whole-- I mean, the president-- it was a tight circle of people that knew the specific reasons in going down on-- on that road, but this isn’t an opening they wanted to fill. They’ve got plenty of openings to fill, particularly in the national security team. This isn’t one that they wanted to fill. And I think there was a chance…

GREGORY: Let’s put up the chart of who-- who could fill the void here as-- as you’re talking.

MR. TODD: Well, it’s my understanding that Morell is very popular.

GREGORY: Mike Morell, he is the acting now.

MR. TODD: Both in the CIA, you know, if there was one knock on Petraeus that you would hear-- and this is usually the case when an outsider comes over at the CIA, Bob would know this better than most, they are not that popular with the rank and file. Morell, he’s career guy, he’s very popular, I wouldn’t be surprised if that acting title goes away, this is how (Unintelligible) got the job.

GREGORY: Look, Steve you know this from being in the Bush administration, this-- General Petraeus is very tied with the Bush administration. There was not a lot of trust in the Obama team of him, fear that he could run for president, not a great relationship between him and the president, which seem to have been repaired, that had to be part of the backdrop here, a certain lack of trust.

MR. STEVE SCHMIDT (Former Senior Adviser, John McCain 2008 Presidential Campaign): Well, General Petraeus has spent much of the last decade abroad. He has served this country very well. He did the honorable thing. We have this tendency in Washington to want to tear people down when they have made a mistake, when they have fallen, but he’s a legitimate American hero, and I think he has got great contributions to make in the future. He will clearly have to navigate this very difficult personal issue, but he has served this country well and this country is more secured today because of General David Petraeus and this country owes him a debt of gratitude for that.

GREGORY: No question about that. Doris, as I have said this weekend, not exactly a topic that brings husbands and wives closer together. Your thoughts about this in terms of what should’ve happened?

MS. DORIS KEARNS GOODWIN (Presidential Historian/Author, “Team of Rivals”): I don’t know. I think in general, I wish we could go back to the time when the private lives of our public figures were relevant only if they directly affected their public responsibilities. What would we have done if FDR had not been our leader because he had an affair with Lucy Mercer? Think of the productive years that Clinton could have had if Monica Lewinsky hadn’t derailed him. We've got to figure out a way that we give a private sphere for our public leaders. We’re not going to get the best people in public life if we don’t do that. This thing is really sad. This man was a great general, a great leader, and for his career to come to an end because of a private matter that affects his family and him and evidently doesn’t have national security concerns. I don’t know how you unravel it, but I wish we could.

MR. WOODWARD: Unfortunately, for the CIA director he has special status and he’s got to be clean. He can’t be blackmailed or threatened or even deal with the anxiety, my God, are they going to find out about her? And he did the right thing, he’s telling associates now and I think this is important David that he’s not going to hide under Iraq. He’s going to do other things as Steve suggests. His career is not over. His career at the CIA is over and that’s absolutely the right thing to do. No, I mean, this-- I have known him for twenty years and Petraeus is the sort of person who the smallest little thing bothers him and to go through this, and clearly a man of-- of conscience made a grave mistake and just that-- that anxiety is the sort of thing that could set anyone on edge.

GREGORY: Let me-- I want to turn to we just heard from Senator Schumer and Coburn about the fiscal cliff and we’re starting to talk now about the mandate for the president in his second term, how do we define it? Our colleague, Ron Fournier, wrote the following piece in The National Journal on Wednesday, digesting the election results. And this question of mandate, here’s what he writes Obama’s victory comes with no mandate. Obama won a second term, but no mandate. Thanks in part to his own small-bore and brutish campaign, victory guarantees the president nothing more than the headache of building consensus in a gridlocked capital on behalf of a polarized public. If the president begins his second term under any delusion that voters rubber-stamped his agenda on Tuesday night, he is doomed to fail. Congressman, you’re a Democrat from San Antonio, you are in a House that is still run by the Republicans. We have a status quo election from that point of view. How do you define the mandates specifically around the fiscal cliff?

REP. CASTRO: I think the mandate very clearly from the American people was for the Congress to take action. David, we've sat here for four years in a gridlock situation and people, in 2010 and in 2012, were clearly frustrated by that. So, I disagree to a large extent, I don’t think it’s a rubber stamp, but I do think that the American people have said to Barack Obama we agree with you on a lot of this stuff and we want the Republican Congress to come along. Remember, some of the most intransigent folks, Alan West, almost Michele Bachmann, others in the Republican Party, who made their political careers saying they weren’t going to go along with anything that the president want to do, they lost their elections.

GREGORY: Yeah, I remember, Steve, President Bush, two days after the election, holding a press conference, the president will do it next week, but not immediately after the election, and he talked about how he viewed the mandate. This is what he said back in-- in 2004.

(Videotape; November 4, 2004)

PRESIDENT GEORGE W. BUSH: Let me put it to you this way, I earned capital in the campaign, political capital and now I intend to spend it. It is my style.

(End videotape)

GREGORY: So, how much capital does President Obama have and where does he spend it?

MR. SCHMIDT: I think the president has capital in the election, his victory was decisive, but the mandate should be determined by the outcome of the election and what the election has given the American people is divided government and the sides are going to have to work together. The president came to national promin-- prominence, promising to be a repairer of the breach in our politics and if he is going to go down in history as a successful president or even a great president or a near-great president, he’s going to have to repair the breach in our politics and we’ll take leadership from him.

MR. TODD: Well, this is going to be the-- but the challenge is going to be this, and I know you’re going to bring in Cramer on-- on this because I think Wall Street is going to end up playing the biggest role here. John Boehner, can he get a-- a majority of his Republicans in the House to go along with whatever deal he cuts with the president? It’s unclear to me. It’s clear that the Republican strategy is they want to try to drag out the negotiations because, you know, do some short-term compromises, drag it out, see if the political-- political space is better for Republicans say in six months, the president’s capital and leverage is in the small window, in the next I’d say two months, particularly before the end of the year. I-- I think I will be curious to see does the president realize that the best way to do this go find ten Republicans in the Senate, go cut the deal with Tom Coburn, with Bob Corker, with Lamar Alexander, keep McConnell out of it, go do it with 65-70 members of the Senate, cut the deal, bring it over to the House, box-- which Boehner secretly might want to be boxed in, by the way…

GREGORY: Yeah.

MR. TODD: …box Boehner in…

GREGORY: Right.

MR. TODD: …maybe it goes down the first time, (Unintelligible) and they may have to come back again, but I’ll be curious to see did the president learn anything from his first term about how to deal with congressional Republicans…

GREGORY: Right.

MR. TODD: …which is don’t do it through the leadership?

GREGORY: In New York Times today, Boehner tells how’s GOP to fall in line, had a tough conference call with him. I do want to bring in Jim Cramer, host of CNBC’s Mad Money, he’s up in New York. Jim, the-- the reason I wanted to check in with you, we have seen in the course of the campaign that a lot of corporate CEOs could now suddenly become natural allies of the president. They want a resolution to this fiscal cliff business.

MR. JIM CRAMER (Host, CNBC’s “Mad Money”): They have to. They have to, David, because we can gift wrap a recession by Christmas, we can set it right into place without some agreement. So, the CEOs have, in many ways, more to lose than everybody, which is why the market got hit this week and the market will continue to be hit until yearend or an agreement.

GREGORY: Explain further what-- what the economic consequences are? What do you hear on Wall Street and among corporate leaders about the-- the-- frankly what happens if we go over the fiscal cliff?

MR. CRAMER: Well, what I’m hearing and I speak to a lot of CEOs in every single different industries, they don’t want to hire. They think that the single biggest consequence of not knowing what’s going to happen is that it’s just worth it to lay off. It is not worth it to hire because with just a series of unknowns who can take a chance, who can take a chance with Washington, better to scale back retail, restaurant, industrial, back-- fire people, that’s the solution to the fiscal cliff until we get an actual resolution.

GREGORY: Jim, I always thought that one of the big mistakes of the first Obama term is that he never had a moment in the Rose Garden where he was flanked by the biggest business leaders in America and said, look, we’re going to work together in common cause to deal with this economy, to deal with our fiscal position and ultimately affect America’s influence in the rest of the world. Can he have that moment now?

MR. CRAMER: Yes, because this time…

GREGORY: They’re willing?

MR. CRAMER: …you know, the leaders need him. The CEOs need him because their businesses are going to go down, their stocks are going to go down. This is what they care about. They care about their own compensation and they care about a higher stock price. You’re going to get declining compensation and I’m giving you lower stock prices for certain without a deal.

GREGORY: All right. Jim Cramer from Mad Money. Jim, thanks very much.

MR. CRAMER: Thank you.

GREGORY: Doris, your-- your point about this, as you look at it?

MS. KEARNS: Oh, I think, what the president has to do to build his mandate is to play both an inside game and an outside game. He should use that political White House as an asset, more than he has done before. I would have the-- I’d have a cocktail hour every night, you have forty Republicans there, forty Democrats there, night after night after night, do what LBJ did, do that more than he’s done. But the outside game means he has to mobilize that base. That base was energized on election night. He said to them, your job is not done. It’s not just voting. It’s there to bring pressure on obstructionist if they don’t get a deal done from the outside in. And I think he signaled that, as I say, that night because he said I’ve learned from you, I’m going to be a better president because of you.

GREGORY: A better president.

MS. KEARNS: That was an amazing statement and I think he’s learned that he needs to use the White House as a political asset more inside and he’s got to get those people. The Tea Party pressured everybody that summer, why can’t his coalition, which is bigger, pressure people from outside?

GREGORY: I want to-- I want to take a break. I want to come back and go back to Bob Woodward who-- who has more reporting on-- on how close they were on that grand bargain before and what that could tell us about where they go. We’ll continue with that. And I do want to talk to everybody around here-- around here about how is it that Obama won? Chuck’s going to show us the numbers on that. Back with more of our roundtable right after this.

GREGORY: We’re back with more from our roundtable. I want to talk about politics and how the president won. But I want to stick with the fiscal cliff. Past this prologue, Bob Woodward, and you have a document here, a secret White House document that goes back to the grand bargain negotiations. Tell us what it is and what it means, you think.

MR. WOODWARD: Well, this is the confidential doc last offer the president, the White House made last year to Speaker Boehner to try to reach this four trillion dollar grand bargain. And it’s long and it’s tedious and it’s got budget jargon in it. But what it shows is a willingness to cut all kinds of things, like TRICARE, which is the sacred health insurance program for the military for military retirees; to cut Social Security; to cut Medicare, and there are-- there are some lines in there about we want to get tax rates down, not only for individuals but for businesses. So Obama and the White House were willing to go quite far, in a sense this is the starting point, and I guess you’re going to put it up on your website…

GREGORY: Absolutely. Yeah.

MR. WOODWARD: …after the budget wonks can…

GREGORY: They can see it. Yeah.

MR. WOODWARD: …parse through it.

GREGORY: Right, we just got it here and we’ll-- we’ll put it on the web. But that’s the point. And congressman, I guess the-- the question that Bob and I talked about is, there’s a lot of spending pain in there that Democrats are going to have to go back to their folks and say, hey, this is the pain you’re going to have to suffer. Are you prepared to do that?

REP. CASTRO: Oh, look, there’s no question. I mean, these are tough issues and that’s why there's been a lot of hand-wringing and wrangling over them. But, yeah, I believe so. I believe you’ve got a Democratic Congress, especially in the House and in the Senate that are willing to make those tough choices, that know that in the long term that we’ve got to reform entitlements.

GREGORY: Mm-Hm.

REP. CASTRO: But we want some balance. We want to make sure that there’s also revenue raising that’s part of it and for four years now the Republicans have been unwilling to do that, I think election will get them in gear and they’ll do it.

GREGORY: …here on the Sunday after the election. How is it that the president won?

MR. TODD: Demographics, pure-- pure and simple. You know, it’s funny, people want to talk about Sandy and all of these other things. When you look at the structure of this electorate, I think he wins on September 6th, October 6th or November 6th. And let me show you why. Here, the first graphic we put up shows you, this is the makeup of the American voting electorate. In 2004, 2008 and 2012, white to non-white…

GREGORY: Mm-Hm.

MR. TODD: …look at the-- it’s a-- it’s a trend line. And by the way, it’s two or three points, so you can keep going back. We went back to 2000, ‘96, it’s unmistakable, the trend line here. And what happened was, Mitt Romney…

MR. TODD: Mitt Romney’s campaign truly believed the electorate would look like 2008. They did not believe it was going to look like what it ended up looking like which, of course, the Obama campaign. Two states in particular show you how the dramatic changes. Here’s the state of Ohio, moved from 83-17, white to non-white to 17/21. All mostly African-Americans in the northern part of the state. And then here is the state of Florida. You want to know how President Obama won the state of Florida. Look at this, it went from 71/29 white to non-white to 67/34. All of this growth was non-Cuban Hispanic, but a few notes on the Hispanic vote, the president won Cubans.

GREGORY: Mm-Hm.

MR. TODD: That is something that actually has gotten lost in all of this. Yes, he did really well with Hispanics in Florida in general and overall. But he won Cubans, third generation Cubans. They weren’t there for the Bay of Pigs, they don’t think about hating Kennedy and the Democrats the way those first two generation. And then finally, I want to show you this map. This is the map of the top ten states by population with Hispanics in it. Here are the top ten, the ones in blue are the ones the president won, the two in red are the two that-- that Mitt Romney won. And I would say this, Republicans, watch out, these two are next. I would say Arizona will be in the battleground in 2016. Texas, Joaquín may have a different-- it’s always-- not-- probably not quite because Texas Republicans a long time ago saw this and they have tried to adjust. But by the way, in case you’re wondering, just these ten states are 216 electoral votes.

GREGORY: Wow. Steve?

MR. SCHMIDT: No, it’s incredible and it’s been coming for a long time. The last presidential candidate to get 60 percent of the white vote, which Mitt Romney did, was George Herbert Walker Bush and he received over 400 electoral votes. Today, it gets you an Electoral College drawback. President George W. Bush got 44 percent of the Hispanic vote. The problem is-- is that there are too many Republican leaders in Congress. If you say the word Latino and you play the word association game with them, they would come back with illegal immigrant, not Silver Star winner, not doctor, not lawyer, not policeman, not fireman. This is an important part of our community. This is an important part of the future of the Republican Party and the Republican Party needs to get it together on its outreach to Latinos. And it’s good to hear that Lindsey Graham and Chuck Schumer are going to start advancing comprehensive immigration reform again, because we have to get this off the table as a political issue for the party and we also have to have a zero tolerance with the terrible tone that’s coming out of the talk radio universe and some of our leaders in Congress who are serially disrespectful to this fastest-growing demographic in the country.

GREGORY: And yet, you have the likes of Rush Limbaugh taking to the radio on the issue of immigration. Congressman this is what he said on Wednesday.

(Videotape; Wednesday)

RUSH LIMBAUGH: Don’t tell me the Republic Party doesn’t have outreach. We do. But what are we suppose do now? We’re supposed to-- in order to get the Hispanic or Latino vote, does that mean open the borders and embrace the illegals. I want to you think about this. Is that what it means? Is that what the Republican establishment, we got to reach out to Hispanics, is that what they mean? If we are not getting the female vote, do we become pro-choice? Do we start passing out birth control pills? Is that what we have to do?

REP. CASTRO: David, and that’s-- that’s very telling because part of the fundamental problem with a big wing of the Republican Party is that when they think of Hispanics they think of folks who are illegal immigrants. What they need to accept is that Hispanics, Latinos late are part of this American family and they are not going anywhere. You have folks that have been here who are second generation, third generation, fourth generation Americans. And they’re making them feel like they’re not part of the United States. And that’s a fundamental problem that goes beyond tone, It goes beyond rhetoric and it actually goes beyond who you elect to Congress or to the Senate. They have got Ted Cruz, Marco Rubio and others now. But it’s more than just the personality, it’s the policies they pursue.

MS. GOODWIN: You know when I think when journalists write about this campaigning the fun part will be all the moments that we experienced together, the gaffes that Romney made, the 47 percent, the things Obama said at the first debate. But the fundamental loss of this campaign probably took place in the Republican primaries when they put out a group of people who were so far off the political cliff on issues that mattered to Latinos, to women and to young people. And that is the new governing coalition. And perhaps the fact that the economy got a little bit better is another fundamental fact. But all these other things preoccupied us for so much time, you can only, looking back, see that-- those twenty debates that bushed everybody, including Romney who became a moderate much too late to get that nomination.

GREGORY: But it's still striking. You have some 70 percent in the exit polls who believe the economy is in bad shape, 52 percent who feel like the country is off on the wrong direction. There’s a lot of opposition out there to President Obama and his policies and yet he prevails because of a coalition ever expanding that believes in a certain role for government, Bob, that is opposed to where the Republicans would like to take it.

MR. WOODWARD: It is. But I think the big picture here is that President Obama has got to deliver on the big issue, which is fixing the financial house of the US federal government. It is in disarray. It’s not just the fiscal cliff, it's 16 trillion dollars in IOUs out in the world. In a couple of months, in February or March, they are going to have to renegotiate an authority-- lending and borrowing authority for another trillion or two dollars. And if the president can fix that and put us on some sort of path of restoration for the economy; that is a pay off for everyone in the community not just his base.

GREGORY: Yeah.

MR. WOODWARD: And he’s got to think much more broadly, the job of the president is to find the next stage of good for a real majority and he’s capable of doing that.

MR. TODD: Let’s look back at the Republican Party. How did they become a coalition of special interest forces? They really do look like the Democratic Party of the ‘70s and ‘80s where they seem to-- the leaders in Washington can’t control the special interest groups. And this is what happened to the Democrats, labor, all of these special interest groups that were-- the-- the folks in Washington knew what the right way was to try to win national elections. They couldn’t quite do it because they were-- basically, they succumbed to their base. The Democratic Party started with Bill Clinton and Obama successfully has been able to carry this over, has never been able to allow the base of the Democratic Party, special interest groups, to overtake the national message. The Republican Part, it's unbelievable that they have allowed to happen.

MR. SCHMIDT: Conservatism is a serious governing philosophy that has served this country well. But to too many swing voters in the country, when you hear the word conservative now, they think of loons and wackos. We gave up five U.S. Senate seats over the last two election cycles by people who were just out there, completely extreme, manifestly unprepared for the offices that they are-- that they are running for. Our elected leaders are scared to death of the conservative entertainment complex, the shrill and divisive voices that are bombastic and broadcasting out into the homes. And this country is rejecting the social extremism of the Republican Party on issue after issue. And if you look at the four states that legalized gay marriage, on a range of issues our coalition is shrinking and the Republican Party has a lot of soul searching to do if we are going to assemble a majority…

GREGORY: Do-- Doris, I want to get to one other thing here which is, you know, the movie Lincoln is opening around the country. And obviously the divisions in America were so profound at that time during the civil war. And yet today, in a different way, we still have so much polarization. Here is moment where the president-- President Lincoln in the film is talking about why it’s so important to push for the abolition of slavery.

(Videotape; Courtesy Dreamworks Pictures)

ABRAHAM LINCOLN: Euclid’s first common notion is this--things which are equal to the same thing are equal to each other. That’s rule of mathematical reasoning. It’s true because it works, has done and always will do. In his book, Euclid says this is self-evident. You see there it is, even in that 2,000-year-old book of mechanical law, it is a self-evident truth--the things which are equal to the same thing are equal to each other.

GREGORY: Can’t wait to see it. You brought your own movie clip, as Chuck pointed out. The polarization then so profound; as this president now strives to be a great president, like Lincoln, what is his challenge to break this polarization? Does it all come back to bipartisanship at some level?

MS. GOODMAN: What it comes back to is a combination of conviction, which is what we just saw Lincoln talking about and the willingness to compromise. Without a question in fact the whole movie is about the idea that in a session of Congress, after the election in 1864, they have to get this amendment passed and they have to do everything they can. At one point he says, I’m clothed by immense power and I’m going to have you use it to get these votes no matter what you have to do. I’m just going to go back to what Bob said. I think what the president needs to do is to bring some CEOs into his top positions, FDR did that. He brought in the head of Chrysler. He brought in the head of Sears and Roebuck. What about bringing Romney in to deal with this whole problem of how do you keep manufacturing here rather than going abroad? What incentives to use? What sanctions to use against countries that are not dealing fairly? I think you bring people in but you don’t lose your conviction. So you got to start with what matters to you but then you compromise on everything else. And I think it can be done.

MR. WOODWARD: And-- and think of the powerful olive branch that Speaker Boehner issued this week, where he said to the president, "We want you to lead." For the Republican leader to say, "We’re willing to follow to a certain extent," now he puts limitations on it, there’s no question about that. But for him to say that, you’re going to go into the House of Representatives…

REP. CASTRO: But-- but I think, Bob-- I think part of the-- part of what you see and what you’ve seen with John Boehner is that he’ll say one thing and then have to reverse course the very next day, which we saw this week…

GREGORY: And that’s the-- yeah.

REP. CASTRO: …and that’s the challenge that Chuck was speaking to.

MR. TODD: Right.

MR. WOODWARD: But as the New York Times story points out and some people I’ve talked to I think he is getting more control and more authority…

GREGORY: Got to take another break here. We’ll be back with more in just a minute.

(Announcements)

GREGORY: Thanks to you all for a terrific conversation. Before we go, a quick programming note for my PRESS Pass conversation this week. I sat down with buzzfeed.com editor-in-chief Ben Smith to talk about what really was the first presidential campaign in the social media era. You can watch it at meetthepressnbc.com. That’s all for today, a special day for MEET THE PRESS as we celebrate turning 65 years old, proud to be the longest-running television program in the world. It truly is humbling to be a custodian of such an important American institution. We’ll be back next week. If it’s Sunday, it’s MEET THE PRESS.